October 17, 2016 / 10:29 AM / 3 years ago

Sales of double-digit million pound UK homes fall 86 percent

LONDON (Reuters) - The number of British homes worth 10 million pounds or more sold over the summer fell by an annual 86 percent, hit by property tax hikes and the Brexit vote, according to official data analysed by a residential fund.

The development of One Hyde Park is seen London, May 2, 2014. REUTERS/Paul Hackett

Just five double-digit million pound homes were bought in the three months to the end of August, according to the London Central Portfolio (LCP), compared to the same period last year when 35 transactions were completed.

A 25.5 million pound property in Belgravia, one of the capital’s most desirable postcodes, was the most expensive home sold but the average selling price of the homes, which were all in London, fell 25 percent to 16.3 million pounds.

Prices in the capital’s prime locations have been falling for two years according to estate agents Savills (SVS.L) after a tax known as stamp duty was raised on all homes worth more than 937,000 pounds and on second homes and properties bought by landlords.

“In the wake of increasing residential property taxes, compounded by uncertainty immediately after the EU Referendum, a dramatic fall in sales has been seen across the super-prime property market,” the LCP said.

Property was one of the first sectors to be hit by the June 23 public vote, with several commercial funds suspended as investors pulled out their cash.

A mixed picture has emerged on how the British housing market has weathered the initial shock, with surveys showing demand has remained robust outside London, where investors and foreign buyers are less active.

But the LCP warned that the collapse in sales of the most expensive properties, primarily in the capital, could cost the government 45 million pounds in lost tax revenues.

“As the government faces the daunting task of negotiating Brexit, together with a potential slowdown in the UK economy, it should consider its strategy on residential property taxation carefully to ensure it meets its objectives of increasing revenues,” said LCP’s Chief Executive Naomi Heaton.

Chancellor Philip Hammond is due to deliver a budget statement on Nov. 23, which could include measures to boost the property sector.

Reporting by Costas Pitas; editing by Stephen Addison

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